Cadwalader attorneys examined the charges brought by the U.S. Attorney's Office for the Southern District of New York and the SEC against Las Vegas sports bettor William ("Billy") Walters and former Dean Foods chair Thomas Davis for allegedly trading on nonpublic company information. The government brought no charges against professional golfer Phil Mickelson, who agreed to repay close to $1 million in trading profits made as part of the alleged scheme. Cadwalader attorneys concluded that the government's decision not to charge Mickelson as an outsider "tippee" likely was based on the Second Circuit's decision in United States v. Newman, which determined that an increased amount of evidence is necessary to prove insider-trading cases against individuals who are several steps removed from corporate insiders. Cadwalader attorneys predicted that future tippees might not be as fortunate as Mickelson. The fate of future tippees could depend on whether the current Supreme Court adopts the Newman standard or opts for the seemingly lower burden accepted last year by the Ninth Circuit in United States v. Salman.
Click here to view the Cadwalader memorandum authored by Joseph Moreno, Kendra Wharton and Doug Fischer.
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